Question

The following transactions occur for Badger Biking Company during the month of June: a. Provide services to customers on account for $34,000. b. Receive cash of $26,000 from customers in (a) above. c. Purchase bike equipment by signing a note with the bank for $19,000. d. Pay utilities of $3,400 for the current month. Analyze each transaction and indicate the amount of increases and decreases in the accounting equation. (Decreases to account classifications should be entered as a negative.)

Answer 1

Answer:

See below

Explanation:

Assets =

Liabilities + Stockholder's equity

Accounts receivables $34,000(+)

Revenue $34,000(+)

Cash $26,000(+)

Accounts receivables $26,000(-)

Bike equipment $19,000(+) Notes payable $19,000(+)

Cash $3,400(-)

Retained earnings $3,400(-)

The first transaction increases asset(account receivable) by $34,000 while revenue(stockholder's equity) increased by the same amount

The cash receipt of $26,000 increases assets cash by $26,000 and decreases an asset , account receivable by the same amount

The purchase of an asset by note payable increases asset, bike equipment by $19,000 while liabilities note payable also increases by $19,000

The payment of utilities for $3,400 decreases asset cash by $3,400 while stockholder's equity retained earnings decreases by same amount.